Complete Guide to Gap Insurance

What is Gap Insurance? | How does it work? | Do you need Gap Insurance? | Is Gap Insurance worth it?

There are a million and one different questions to ask before purchasing a form of Gap Insurance and that's why we have created the ultimate Gap Insurance guide to answer all your questions. If you have any further questions to ask, please don't hesitate to contact a member of our award winning customer service team, who will be more than happy to help!

Q. What is Gap Insurance?

Gap is short for Guaranteed Asset Protection. This form of insurance is designed to protect you financially should your vehicle be declared a total loss. This might be as a result of an accident, fire, theft or flood damage for example but there are numerous different scenarios in which a vehicle may be declared a total loss. As your own motor insurance company would only ever give you the market value of the vehicle at that moment in time (depending on the terms of your motor insurance policy) the figure paid may be less than the insured first paid for the vehicle.

Gap Insurance will then step in and bridge the financial shortfall under those circumstances. However, the way in which it performs depends on the type of cover you select.

Q. How does Gap Insurance work?

Depending on which type of Gap protection you choose, it will pay the difference between your own motor insurers settlement figure in the event of a total loss (i.e accident, theft, fire and flood etc.) and either:

You have to insure the vehicle with a fully comprehensive motor insurance policy.

Your motor insurance company have to declare it a 'total loss' and pay the market value.

If the vehicle is not declared a total loss and is repaired for example, there is no claim to make on the GAP.

Q. Do you need Gap Insurance?

It is not a legal requirement for you to buy Gap Insurance as it is to buy comprehensive motor insurance for your vehicle. Gap Insurance cannot be imposed on you during the purchase process of the vehicle in the UK and instead you should be introduced to the product separately.

No, you don't need to buy GAP, however, as your own motor insurance company would only ever pay the market value of the vehicle at the point of total loss and vehicles depreciating by as much as 50% over a three year term, you can see why it might be a good idea to have that financial peace of mind. Whether you can see the value in the product or not, is yours to decide.

Q. How much should Gap Insurance be?

This does depend on a number of factors, the price of your vehicle, the length of cover you would like and also the policy type you select. As you can imagine, the more expensive the vehicle, the more room for depreciation and therefore the more expensive the policy may be. That said, depending on where you buy your GAP from will also have an impact on the price you pay.

At Shortfall.co.uk we aim to be amongst the best price you'll find on the market, however, if you are quoted within the dealership it tends to be a lot more expensive. Most recently, Martin Lewis Money Saving Expert has released a report on Gap Insurance and the difference in price between online independent suppliers such as ourselves and dealerships. For the previous 5 years, we have been featured within the Which? consumer magazine's report on Gap Insurance, which again highlights the difference in price between ourselves and other online suppliers.

Q. When can you buy Gap Insurance?

If you would like to purchase the most comprehensive forms of Gap Insurance, you tend to have a maximum of up to 180 days from when you have taken delivery of the vehicle to take the cover out. If you are outside of the 180 days, you have a number of options depending on the circumstances and the level of cover required.

At Shortfall.co.uk you have up to 180 days to take the most comprehensive options. However, we act in a similar way to a broker and our sister brands Gap Insurance 123, Easy Gap and Totallossgap.co.uk may be able to offer an alternative level of cover should we be unable to. We would always advise you to give a member of the team a call and we can run through the options with you.

Q. Is Gap Insurance only for new cars?

No. In fact we provide Gap Insurance for any age of vehicle as long as the vehicle has less than 80,000 miles on the clock before purchasing the policy. Other providers may be limited to 8 years of age or 10 years of age, again providing you fit the other criteria, you still have the ability to protect yourself with GAP.

Q. Is Gap Insurance better for new cars?

There are a couple of things to consider when answering this question. First of all, the fact that you will typically pay more for a new vehicle than a used one, results in an increase in the depreciation rate of the vehicle, i.e the vehicle may lose more in terms of value or at least depreciate at a quicker rate. That said, it does depend on the make and model as well as the physical purchase price you have paid.

Due to the rate of depreciation on new vehicles, the need for Gap may be greater, however, that's not to say that if you have purchased a used vehicle, you won't be subject to depreciation because thats not the case.

Q. Which type of Gap Insurance is best for you?

As you can see above, there are a number of different types of Gap Insurance for you to choose from, however, depending on a number of different circumstances, one policy may be more suitable than another. When you click through to obtain a quotation, the system will point you to the different types that you are eligble for. But, which is the most suitable for you, is down to your expectations of Gap Insurance and what you would like it to protect in the event of a claim as well as what policy you may be eligible for.

Aequitas Automotive Limited is an appointed representative of Tobell Insurance Services Limited, which is authorised and regulated by the Financial Conduct Authority. Tobell Insurance Services Limited’s FCA Number is 309576. Tobell Insurance Services Limited permitted business is arranging general insurance contracts and consumer credit broking, but not as a lender.